PRC-1 · Chapter 9 · Question 66 of 100
A direct transfer of Rs. 209,000 (net of a 5% settlement discount) from a customer appeared in the bank statement but not the cash book. The revenue was originally recognized at gross. What is the correcting double entry in the books?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Bank Rs. 209,000, Debit Discount Allowed Rs. 11,000, Credit Receivables Rs. 220,000
Explanation
The gross amount is 209,000 / 0.95 = 220,000. The discount allowed is 11,000. To record this, debit the Bank with 209,000, debit Discount Allowed with 11,000, and credit Receivables to clear the 220,000 balance.
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